Onyx Coffee
Sector
Agriculture
Type
Direct Lending
Geography
Latin America
Amount
$1500000
Year
2024
| Investment Date | June 2024 |
| Asset Class | Direct Lending |
| Ceniarth Commitment | $1.5m |
| Geography | Latin America |
| Sector | Financial Inclusion |
| Investment Rationale | Providing working capital to improve cash flow management for the company to enable increased purchases from smallholder producers |
| Impact Hypothesis | Supporting a company which works with smallholder farmers to increase their income |
| Impact Key Issues | Number of smallholder farmers worked with; producers earning above market rate; providing access to market; increase impact measurement for Onyx |
| Catalytic Levers | Pilot Debt |
| C3 Category | Scaling |
| 2X Criteria | No |
Deal Summary
Ceniarth has made an $1,500,000 investment in June 2024 to support working capital needs of Onyx Coffee, a business that acts as a marketplace, connecting smallholder coffee farmers in remote areas Guatemala with speciality coffee roasters globally. Onyx Coffee works to create market opportunities for smallholder farmers, maintaining transparency in the market, premium prices for the producers, and ensuring quality for the roasters. Ultimately, Onyx works to ensure a fairer share of value with famers in the coffee supply chain. The company aligns with Ceniarth’s principles of increasing livelihoods of smallholder farmers and working with marginalised communities.
Beneficiary Impact
In Guatemala, there was a lack of options for small coffee producers and market prices did not reflect the quality of the product. Onyx Coffee has significant beneficiary impact through working directly with the smallholder farmers to improve market access and price transparency for high quality coffee beans. They work with around 800 smallholder farmers including direct legacy relationships and three co-ops. Onyx paid 30% to 78% above market price with a net premium of $386k paid out to legacy producers in 2023 which is an average premium of around $480 per farmer. By working with the same producers year after year Onyx provides predictability, stability and planning not afforded to most smallholder farmers in Guatemala. Through consistent premiums, Onyx provide impact in empowering smallholder farmers to qualify for credit with local banks, providing them with the ability to build up financial resilience and inclusion.
Intermediary Impact
In addition to long term partnerships with smallholder farmers in Guatemala for coffee production, Onyx works on bespoke projects in the region which create additional impact. These include working with producers to build infrastructure at farm level and allowing producers to diversify income streams. This includes working with coffee producers to supplement their income by creating honey farms on their land allowing for economic sustainability for small land holders in rural areas. The hard costs of inputs are very low, and this is an accessible option for producers.
Onyx has run programmes with a select group of farmers to enhance the lives of the smallholder farmers that they work with. This includes projects building homes and installing smokeless stoves. Onyx also has facilitated roaster contributions, for example, the building of water catchment systems to ensure potable water in areas where it was not available year-round.
Capital Additionality
This investment uses one of our seven core catalytic levers Pilot Debt. We are providing Onyx with working capital so that they can increase the amount of green coffee that they import directly and limit the amount of time that import partners own the coffee, thus reducing costs and reducing money lost in the coffee value chain – ultimately this can hopefully facilitate more profitable growth for Onyx and over time potentially more value to be shared with farmers. Our loan is highly additional, supporting working capital needs that are currently unmet by the existing revolving credit line and facilitating more efficient cashflow management for the business.
